Transcription of THINKING BEYOND BASEL III: NECESSARY …
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OECD Journal: Financial Market Trends Volume 2010 Issue 1 OECD 2010 Pre-publication version 1 THINKING BEYOND BASEL III: NECESSARY solutions FOR CAPITAL AND liquidity Adrian Blundell-Wignall and Paul Atkinson* In previous studies, the OECD has identified the main hallmarks of the crisis as too-big-to-fail institutions that took on too much risk, insolvency resulting from contagion and counterparty risk, the lack of regulatory and supervisory integration, and the lack of efficient resolution regimes. This article looks at how the BASEL III proposals address these issues, helping to reduce the chance of another crisis like the current one. The BASEL III capital proposals have some very useful elements, notably a leverage ratio, a capital buffer and the proposal to deal with pro-cyclicality through dynamic provisioning based on expected losses.
THINKING BEYOND BASEL III: NECESSARY SOLUTIONS FOR CAPITAL AND LIQUIDITY 4 OECD JOURNAL: FINANCIAL MARKET TRENDS – VOLUME 2010 ISSUE 1 © OECD 2010 Table 1. Basel I and Basel II risk weights and commentary
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